China’s stock market remains under pressure and European stocks are drifting as investors continue to watch for signs that the trade dispute between China and the US could be influencing China’s policy on its currency.

What you need to know:
Equities lower as trade fears persist.
European tech stocks track losses for the sector overnight on Wall Street.
Renminbi moves further up off lows as attention stays on China’s currency policy.
Chinese stock indices stay under more pressure than their peers.
Sterling bounces up after reassuring services sector economic data.
Leading quote
“Possible trade wars are just another worry on top of other existing global economic problems, but the expectation of recession is usually necessary for a bear market to occur and we don’t believe that is about to happen,” says Jane Sydenham, investment director at Rathbones.

The CSI 300 index of major stocks in Shanghai and Shenzhen ended 1.3 per cent lower after a volatile run during the session. The index, which touched a one-year low is down more than 20 per cent from its highest point this year, touched in late January.

London’s FTSE 100 is down 0.2 per cent, while Frankfurt’s Xetra Dax 30 is down 0.3 per cent. The Europe-wide Stoxx 600 is up 0.1 per cent. The Stoxx index tracking technology stocks is down 0.9 per cent after falls for the sector in the US overnight.

With Wall Street markets closed for the Independence Day holiday, trading volumes are likely to be thinner throughout the session.

The turnround came as a result of what traders said was Chinese state banks aggressively selling dollars to support the renminbi, and after People’s Bank of China governor Yi Gang sought to calm markets, attributing renminbi weakness to a strong dollar and “some pro-cyclical behaviour”.

Hong Kong’s Hang Seng fell 1.1 per cent, while Tokyo’s Topix was flat for a second consecutive session.

Forex:
The euro is up 0.2 per cent at $1.1672, as the dollar looks tired after its sustained gains over the year to date. The index tracking the dollar against six other currencies is down 0.3 per cent on the session, taking its 2018 advance to just under 2.5 per cent.

Sterling turned positive for the session — up 0.1 per cent at $1.3205 — after robust data from the UK’s dominant services sector. The purchasing managers’ index (PMI) for June hit its highest level since October 2017. Before the data came out, it was down 0.2 per cent.

“The services PMI broadly confirms that the weakness in the first quarter of the year looks to have been an anomaly.

“We will learn more about the health of the economy next week as hard data for the second quarter emerges — commencing with the first release of monthly GDP. Our expectation is that the data will not be strong enough to encourage the Bank to hike as soon as August.”

Commodities:
Brent crude is up 0.2 per cent to $77.94 a barrel. Gold is 0.6 per cent firmer at $1,260 an ounce.